ArQule, Inc.
ARQULE INC (Form: 8-K, Received: 09/29/2017 17:22:04)

 

 

 

UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

 

Date of report (Date of earliest event reported): September 27, 2017

 

ARQULE, INC.

(Exact name of registrant as specified in its charter)

 

Delaware 000-21429 04-3221586
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer Identification No.)
incorporation)  

 

One Wall Street

Burlington, MA 01803

(Address of principal executive offices) (Zip Code)

 

(781) 994-0300

(Registrant's telephone number, including area code)

 

N/A

(Former name or former address, if changed since last report)

 

 

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

¨ Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨

 

 

 

 
 

 

Item 3.01. Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.

 

As described below, ArQule, Inc., a Delaware corporation (the "Company"), has been communicating with The Nasdaq Stock Market LLC ("Nasdaq") regarding an issue of inadvertent non-compliance with Nasdaq Listing Rule 5635(c) (Shareholder Approval of Equity Compensation). Nasdaq has confirmed that the Company has regained compliance with the rule, and the matter is now closed.

 

As disclosed in the Company’s annual proxy statements, a portion of each independent director’s annual compensation includes a grant of stock options under the Company’s Amended and Restated 1996 Director Stock Option Plan (the “1996 Plan”). In June 2017, after a full investigation, the Company determined that stock options covering 250,000 shares were issued under the 1996 Plan after its stated expiration date. The Company found that, while stockholders had approved an increase in the number of shares available for grants under the 1996 Plan as recently as May 2014, the Company inadvertently did not seek stockholder approval of an amendment to extend the expiration date of that Plan beyond May 2016. The Company also concluded that at no time did it award options in excess of amounts approved by stockholders and that the same awards could have been made under the Company’s 2014 Equity Incentives Plan (“2014 Plan”).

 

On July 11, 2017, the Company voluntarily notified Nasdaq of this administrative oversight and discussed its proposed remediation plan. On September 19, 2017, the Company’s board of directors unanimously approved resolutions to ratify the issuance of stock options to directors under the 1996 Plan, as well as the other acts discussed below, in accordance with the Delaware General Corporation Law and to reduce the number of shares reserved for issuance under the Company’s 2014 Plan by the number of shares underlying the directors’ stock options that were ratified. The board also agreed that the directors’ stock options ratified by the vote would be governed by the terms of the 2014 Plan.

 

In response to the Company voluntarily notifying Nasdaq of the administrative oversight described above, by letter dated September 27, 2017, Nasdaq notified the Company that, as a result of the Company’s granting options under the 1996 Plan after its termination date, Nasdaq had determined that the Company did not comply with Nasdaq’s stockholder approval requirement with respect to the 1996 Plan as set forth in Listing Rule 5635(c). Nasdaq further determined that, as a result of the remedial action taken, the Company has regained compliance with the Rule and that this matter is now closed.

 

Item 8.01 Other Events.

 

The information set forth in Item 3.01 is incorporated by reference herein.

 

In addition to the findings and actions discussed above, in conjunction with its investigation, the Company determined that (i) grants of options for the purchase of 36,399 shares of common stock, and issuances of 36,399 shares of common stock upon the exercise of those options under the Company’s Amended and Restated 1996 Employee Stock Purchase Plan (an employee plan intended to satisfy the requirement of Section 423 under the Internal Revenue Code) and (ii) issuances of 64,696 shares of common stock to directors (upon each director’s election in lieu of cash fees) under the Company’s 2005 Director Stock Compensation Plan were issued after the expiration dates of such plans. On September 19, 2017, the board adopted resolutions ratifying any potential “defective corporate acts” under both plans. In no instance were the options granted or shares issued under these plans in excess of those approved by the Company’s stockholders.

 

 

 
 

 

The statutory notice required by Section 204 of the Delaware General Corporation Law to the Company’s stockholders is set forth in Exhibit 99.1 hereto and incorporated by reference herein.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits.

 

 

Exhibit

No.


Description
     
99.1 Statutory Notice Pursuant to Section 204 of the Delaware General Corporation Law

 

 
 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  ArQule, Inc.  
  (Registrant)  
     
  By:    /s/ Peter S. Lawrence  
    Peter S. Lawrence  
    President  
    Chief Operating Officer  

 

Date: September 29, 2017

 

 
 

 

EXHIBIT INDEX

Exhibit Number

 

99.1 Statutory Notice Pursuant to Section 204 of the Delaware General Corporation Law

 

 

 

 

 

Exhibit 99.1

 

 

NOTICE OF RATIFICATION OF POTENTIALLY DEFECTIVE CORPORATE ACTS

 

BY THE

 

BOARD OF DIRECTORS OF ARQULE, INC.

 

 

(Pursuant to Section 204(g) of the Delaware General Corporation Law)

 

Notice is hereby given, pursuant to Section 204 (“ Section 204 ”) of the Delaware General Corporation Law (the “ DGCL ”), that on September 19, 2017, the Board of Directors of ArQule, Inc., a Delaware corporation (the “ Corporation ”), adopted resolutions approving the ratification of potentially defective corporate acts, as describe below, pursuant to Section 204 of the DGCL (the “ Ratification ”).

 

Ratification of Stock Under the 2005 Director Stock Compensation Plan . The Board determined that issuances of 64,696 shares of Common Stock of the Corporation (the “ Common Stock ”), as set forth on Exhibit A (the “ 2005 Director Shares ”), to directors of the Corporation pursuant to the 2005 Director Stock Compensation Plan (the “ 2005 Plan ”) were potentially defective corporate acts because of the following possible failures of authorization: the options were granted after the 2005 Plan expired on November 11, 2015, the 2005 Plan was not amended to extend the expiration date, and the resolutions of the Board authorizing the issuance of such 2005 Director Shares did not expressly reference the 2005 Plan. On September 19, 2017, the Board ratified the issuance of the 2005 Director Shares pursuant Section 204 to avoid any uncertainty related to such shares. The dates of the issuances of the 2005 Director Shares are the dates listed in the Issuance Date column of Exhibit A (the “ Issuance Dates ”). In connection with such ratification, the Board also amended the 2005 Plan to extend the expiration of such plan to the extent necessary to give effect to the ratification of the Director Options.

 

Ratification of Options Under the 1996 Director Stock Option Plan . The Board determined that grants of options for the purchase of 250,000 shares of Common Stock, as set forth on Exhibit B (the “ Director Options ”), to directors of the Corporation pursuant to the 1996 Director Stock Option Plan (as amended and restated, the “ 1996 Plan ”), were potentially defective corporate acts because of the following possible failures of authorization: the options were granted after the Director Plan expired on May 18, 2016, the Director Plan was not amended to extend the expiration date, and the option grants may not have satisfied the requirements of Section 157 of the DGCL, including by failing to expressly reference the Director Plan. On September 19, 2017, the Board ratified the grant of the Director Options pursuant to Section 204 to avoid any uncertainty related to such options. The dates of the grants of the Director Options are the dates listed on Exhibit B in the Grant Date column. In connection with such ratification, the Board also amended the Director Plan to extend the expiration of such plan to the extent necessary to give effect to the ratification of the Director Options.

 

 
 

 

 

Ratification of Stock Under the Amended and Restated 1996 Employee Stock Purchase Plan. The Board determined that grants of options for the purchase of 36,399 shares of Common Stock, and issuances of 36,399 shares of Common Stock upon the exercise of such options, as set forth on Exhibit C (the “ Employee Options and Shares ”), to employees of the Corporation pursuant to the 1996 Employee Stock Purchase Plan (as amended and restated, the “ Employee Plan ”), were potentially defective corporate acts because of the following possible failures of authorization: the options were granted after the Employee Plan expired on May 18, 2016, the shares were issued upon exercise of potentially improperly authorized options, the Employee Plan was not amended to extend the expiration date, and the option grants might not have satisfied the requirements of Section 157 of the DGCL, including by failing to expressly reference the Employee Plan. On September 19, 2017, the Board ratified the grant and issuance of the Employee Options and Shares pursuant to Section 204 to avoid any uncertainty related to such options or shares. The dates of the grants and issuances of the Employee Options and Shares are the dates listed on Exhibit C in the Grant Date and Issuance Date columns. In connection with such ratification, the Board amended the Employee Plan to extend the expiration of such plan to give effect to the ratification of the Employee Options and Shares.

 

Any claim that the defective corporate acts (including all putative stock) identified in this Notice are void or voidable due to the failure of authorization, or any claim that the Court of Chancery of the State of Delaware should declare in its discretion that the ratifications not be effective or be effective only on certain conditions, must be brought within 120 days from September 29, 2017.

 

 

 

 

 
 

 

 

EXHIBIT A

 

ArQule, Inc.

Shares of Common Stock Under the 2005 Plan

 

Issuance Date Number of Shares Issued  
Issuance
Date

Number of Shares Issued
1/11/2015 504   11/7/2016 976
11/17/2015 801   11/15/2016 724
11/17/2015 411   11/15/2016 1,413
11/18/2015 2,459   11/18/2016 2,232
11/18/2015 1,280   11/18/2016 4,285
12/10/2015 294   12/5/2016 459
1/5/2016 595   1/12/2017 838
1/19/2016 558   1/17/2017 653
1/19/2016 670   1/17/2017 784
2/18/2016 1,689   2/18/2017 2,604
2/18/2016 3,243   2/18/2017 5,000
2/24/2016 336   3/1/2017 480
2/24/2016 403   3/15/2017 1,024
3/14/2016 776   3/21/2017 847
3/22/2016 578   4/26/2017 618
3/22/2016 693   5/18/2017 2,561
4/26/2016 374   5/23/2017 813
4/26/2016 449   6/26/2017 1,000
5/11/2016 766   Total 64,696
5/18/2016 1,965      
5/18/2016 3,773      
5/24/2016 595      
5/24/2016 714      
7/11/2016 730      
7/18/2016 613      
7/18/2016 736      
7/27/2016 383      
7/27/2016 460      
8/18/2016 2,042      
8/18/2016 3,921      
9/12/2016 850      
9/20/2016 1,250      
9/20/2016 1,500      
10/25/2016 443      
10/25/2016 531      

 

 

 

 
 

 

EXHIBIT B

 

ArQule, Inc.

Outstanding Options Granted After May 18, 2016 Under

The 1996 Plan

 

 

Grant Date Options Granted
5/24/2016 20,000
5/24/2016 20,000
5/24/2016 20,000
5/24/2016 20,000
5/24/2016 20,000
5/24/2016 25,000
5/23/2017 20,000
5/23/2017 20,000
5/23/2017 20,000
5/23/2017 20,000
5/23/2017 20,000
5/23/2017 25,000
Total 250,000


 

 
 

 

EXHIBIT C

 

ArQule, Inc.

Shares Issued After May 18, 2016 Under

The Employee Plan

 

 

Grant Date

Issuance Date/Exercise Date Number of Shares Issued
5/1/2016 10/31/2016 438
5/1/2016 10/31/2016 3,511
5/1/2016 10/31/2016 2,633
5/1/2016 10/31/2016 1,646
5/1/2016 10/31/2016 263
5/1/2016 10/31/2016 6,234
5/1/2016 10/31/2016 1,712
11/1/2016 4/30/2017 594
11/1/2016 4/30/2017 3,565
11/1/2016 4/30/2017 2,228
11/1/2016 4/30/2017 475
11/1/2016 4/30/2017 11,883
11/1/2016 4/30/2017 594
11/1/2016 4/30/2017 386
11/1/2016 4/30/2017 237
    36,399